What’s the Deal: Betting on Tech

The exterior of 915 Broadway in the Flatiron district of Manhattan on July 6th, 2012.

Real-estate investors are making long-term bets on Midtown South as technology tenants snap up space in the trendy area.

In the latest deal, a group led by Earle Altman and real-estate investor Richard Hadar is doubling down on 915 Broadway, a large office building in the heart of the Flatiron District, at Broadway and 21st Street. The group has paid $130 million to purchase the remaining 85% stake in the 250,000-square-foot building. The group also plans to put another $10 million into the deal, including improvements.

Mr. Altman, chairman of ABS Partners Real Estate, has owned a 15% stake in the 20-story structure since 1981. “Why double down?” said Gregg Schenker, a co-managing partner and president of ABS, and another investor in the building. “Because of the major change that’s taking place in Midtown South.”

Mr. Altman and a different group of investors acquired 915 Broadway for $6 million in 1981 when the property was still used for light manufacturing. Over the years the area evolved into an alternative for office tenants priced out of Midtown, and eventually into one of the most sought-after locations in the city for tech and new media.

The building is currently occupied by high-profile technology tenants including Union Square Ventures, a prominent venture-capital firm; web-advertising firm Jump Associates; and General Assembly, a technology-education company. The owners also plan to install a new two-story lobby and upgrade the retail space after the current tenant’s lease expires early in 2014.

Some experts have questioned whether rent and occupancy growth in Midtown is a bubble that could eventually burst. But so far this year it’s proving to be one of the strongest office markets in the city, with a vacancy rate for prime buildings hovering around 6%.

Richard Hadar’s previous acquisitions include the Citicorp Center at 601 Lexington Ave. and the LVMH building at 1 E. 57th St. Another new investor in 915 Broadway is Jeffrey Feil, of the Feil Organization, which owns office properties including the Fred F. French building on Fifth Ave.
—Laura Kusisto

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